Parekh applauded measures to boost the domestic manufacturing sector, including production-related incentives, with a focus on new and emerging sectors. “We must seize the opportunities offered by companies pursuing a China plus one strategy,” he said.
Refuting critics of India’s manufacturing history, Parekh said critics lacked efforts to build high-end manufacturing capabilities in the country.
Regarding the global outlook, Parekh said that while the United States is struggling with inflation, the rest of the world is facing the double whammy of inflation as well as dollar strength. “A strong dollar benefits US consumers buying foreign goods, but for the rest of the world, the strong dollar causes serious imbalances.”
The HDFC chairman asked the IMF to call for prudent use of foreign exchange reserves to guard against possible future shocks and only intervene to ensure macroeconomic stability.
“That means allowing exchange rates to adjust, while using monetary and fiscal tools to align the inflation rate closer to the target rate. In my opinion, the RBI has been extremely careful in its management of exchange rates.
“We have never seen a free fall in the rupee and the current currency depreciation is not a reflection of a change in the fundamentals of the Indian economy,” he said.